Houses are 353% More Affordable in Halifax than Vancouver

I’m sure that I’ve mentioned it before, but I commute to and from work with a group of people. Lots of chats happen on the van, like the one where we were dreaming of winning the lottery, which was followed by how people lost permanent teeth while playing hockey and being teenagers. Some conversations are good, some aren’t so much.

Anyway, I inadvertently instigated a conversation on a topic that irks me. People don’t realize how rich they are. “People can’t afford to live here and buy houses with just one income.”

Bullshit.

That’s exactly what I said. Bullshit.

Of course, that’s just my word. Let’s introduce SCIENCE, shall we? At the very least, let’s introduce some numbers into this.

I live in an area with high incomes, relative to the rest of the country. My particular town has a moderately high housing price point, but it’s got nothing on Greater Vancouver, or Toronto.

The problem with a lot of my ideas is that they take a decent amount of research. Given that a lack of appreciation for how low house prices are, relative to local incomes, is a pet peeve of mine, I am going to run with it so that you can compare your own real estate situation with all of these major cities in Canada.

Average Detached House Price vs Median Household Income

My Town

Vancouver

Calgary

Toronto

Montreal

Halifax

Avg Detached House Sale Price

$467,000

$ 900,000

$ 466,402

$ 805,308

$ 321,250

$ 284,082

Median Household Income

$ 92,177

$ 78,200

$ 105,300

$ 76,100

$ 69,500

$ 87,100

House Price as Multiple of Income

5.06

11.51

4.43

10.58

4.62

3.26

20% Down Payment

$ 93,400

$ 180,000

$ 93,280

$ 161,062

$ 64,250

$ 56,816

Monthly Mortgage Payment

$2,279

$4,349

$2,254

$3,891

$1,552

$1,373

Estimated Monthly Net Income*

$6041

$5,252

$6,649

$5,046

$4,697

$5,429

Remaining Income After Mortgage Payment

$3,762

$903

$4,395

$1,155

$3,145

$4,056

Mortgage Payment as % of Gross Income

24.7%

66.7%

25.7%

61.4%

26.8%

18.9%

Mortgage Payment as % of Net Income

37.7%

82.8%

33.9%

77.1%

33.0%

25.3%

Here are the data sources and notes. There are a LOT of assumptions made!

*This is assuming no deductions, the income is earned equally by each person (50% each) and I used taxtips.ca for the estimates. All situations assume a two-adult household, January 1975 birth, no kids.

Median Total Income came from CANSIM table 202-0408, for Census families, two persons or more. It’s for 2011, it’s the best I could do, so whatever.

For My Town, I used the NHS for 2011. Nope, not telling you the exact table! It’s median household income for an economic family.

Let’s All Move to Halifax!

The ratio of house price to median household income Halifax is 353% less than that in Vancouver (3.26 vs 11.51). That’s a massive difference my friends.

Naturally, things aren’t quite that simple, we can’t all just pick up and move to Halifax. Plus, income tax rates are substantially higher in Nova Scotia compared to other provinces. That has an effect on net income, and what is left over after paying for a mortgage.

That said, I would also put forth that folks in Halifax are even better off than the numbers suggest, due to the size of the informal economy that exists in the eastern provinces. There is a lot of swapping of services, swapping of goods, bartering and “I owe ya one” exchanges down east.

To the many who live in Vancouver and the GVRD, sorry, but the City of Vancouver’s detached houses just aren’t feasible purchases for most.

Observations on Real Estate in Canada

Obviously, I had to make a lot of assumptions to come up with scenarios which compared city to city, but holding these things constant gives quite a solid picture of the housing situation in these cities. As an example, there may be fewer detached houses in one city and so people live in townhouses. The detached house prices would therefore be higher and not representative of what the general population purchases.

Rent is expensive in a lot of these places, so saving up for those down payments would be difficult. People are most screwed in Vancouver.

Calgary’s real estate has done some acrobatics lately, but in general, it looks like a pretty good place to be!

Montreal has the lowest household income, but only the third lowest net income after paying for an average mortgage. Total dollars are far from the whole picture when it comes to lifestyle.

Median incomes vary quite a bit and as such, the ratio of house price to income is driven by both numbers. Someone earning the median income in Calgary that went to buy a house in Vancouver would only be paying 8.5 times annual income, compared to the 11.5 of a Vancouverite. A Montrealer would be facing 12.9 times their income (and have no hope of being approved!)

More Questions on Affordability and Housing

Other questions I would love to answer (you know you wish you were in my mind, this is how it always goes, asking eleventy more questions):

What percent of residents are homeowners in these cities?

What percent of homes are actually detached in these cities?

How do rent prices compare to mortgages? (Aka, how long does it take to save up a down payment?)

How do other cost of living measures compare, do they still make Halifax more affordable?

How have these relationships between cities changed over time?

What does the “average” house look like between cities? Is an “average” house in Vancouver better or worse than an “average” house in Halifax? My suspicion is that Halifax wins yet again.

Comments on Real Estate in My Town

Did anyone else notice that my town has the second highest median household income, after Calgary? I sure did.

Many of the house prices here are tightly grouped around that $467,000 figure, too. If you were to walk up to me and ask the price of a “standard” family house here, I would tell you that almost everything is between $450 and $550k. There are also older, smaller options in the $200s and $300s, condos starting at about $150k, and a few neighbourhoods in the $800k to $1.4M range. That is to say that just because the median price is that high does not mean there are no options below it.

All in all, things here are pretty good. Many other towns have substantially lower wages (though some also have lower house prices, yes).

I think that what you get for the average purchase price of $467,000 in my town is a house and yard that many people are happy to live in. Those same people would probably not be satisfied with the average, $466,402 house in Calgary. Granted, those numbers are a few years old, but I thought I would see what they would buy today.

Right now, $459,000 will get you a 3 bed, 2 bath, 1855 square foot house built in 1985 with a new roof, some renos and a detached two car garage. That’s in my town.

In Calgary, for $460,000 I found a 1 bed, 1 bath, 764 square foot house built in 1927 that has been fully renovated and has a new one car garage. It’s several blocks north of 16 Ave NW, above the downtown.

Moving to much further out neighbourhoods in Calgary, $459,000 will get you a 3 bed, 1 bath, 1558 square foot house built in 1956 with some renos and a detached two car garage. So one less bathroom, 300 fewer square feet, and 29 years older. Plus a commute if you work downtown. Not a terrible house, by any means, but you get less house at the average price point.

$460,000 House in my Town

$460,000 House in a Calgary Neighbourhood

How Does Your Situation Compare?

I grew up in Greater Vancouver, in a city with high housing prices. My spouse grew up in a Toronto neighbourhood known for high housing prices. We live in a condo and often think about how much better off we are, compared to our friends in big cities, thanks to our wages and the relatively affordable housing here. Plus, and this is a big factor, rent is fairly low here, making it much easier to save up for a down payment. To partially clarify that statement, there are rental options that are quite affordable, we live in a much nicer place than we rented.

About Anne

Anne dreams of financial independence and is working her way towards it, whilst still enjoying life. She has a penchant for gift giving, which got her started with her first blog, Unique Gifter. She also loves money (who doesn't?) and needed an outlet to discuss it. Her likes? Seafood, figure skating, road cycling and skater shoes.

Comments

I have a friend and her family migrated to Edmunton, Alberta, Canada because of low housing prices and opportunities are great. Nice comparison Anne. It is great to see how a certain amount of money can buy a different house in different places. And, I think this is a must that every couple who is looking for a house to buy should consider to make those money well spent.Jayson @ Monster Piggy Bank recently posted…Saving Money on Car Insurance: It Doesn’t Need To Be a Headache

Interesting comparisons. I just did a quick look at the details for my town (regional city, Victoria, Australia) and the median house costs over 7.5 times the median household income… For median individual income it’s over 14 times. That makes home ownership (and renting – $270 p.w.) expensive.

Yeah for Halifax 🙂 Our taxes are higher because, well our population is OLD so we spend a lot on healthcare. I love Halifax and Halifax as an entire city does have a lot of very affordable houses. A millon dollrs will get you a mansion in a beautiful restored Victorian era home on the ocean seconds from DT core. Or a new build on like 3 acres of waterfront land. MY aunt from Victoria came down (she’s a real estate agent) and said our home, as is, in Victoria would sell for an easy 450-500k. Im hoping to sell in 2-3 years for 250k in Halifax. It really depends on income. We make good income for halifax (upper middle class) but i personally would earn close to what BOTh of us makes if inBC or Alberta. So funny how one two cities on the same country are SO different.Catherine recently posted…Social Media Has Changed How I Manage My Money

Fascinating! Thanks for sharing your insights. It’s especially interesting due to the similarities between Victoria and Halifax: lots of military, university, retired people, on the ocean.
I didn’t realize that dental wages varied so much across the country, either. I know that they aren’t great in some places in Vancouver, depending on your role.

yeah Victoria is a lot like Halifax (why we moved back here- I was born in Victoria, where dad is from, mom from NB but they settled on NS for roots). They are a lot alike but we can’t ignore the fact that more young people STAY in BC because most industries pay better wages for young people (compared to out here) and NS does have the oldest population and highest cancer rates (again because of said old population). It’s a great province with a lot of potential and I’m hoping if we stay long enough (and aren’t tempted to move) we’ll reap some benefits of a population influx (the government has most people brainwashed that the Irving shipyard win alone will support us. We also put too much emphasis on immigration and though I’m very much pro-immigration I feel we put too much emphasis on immigration rather than encouraging our own young people to stay and young families to procreate (like better mat leave wages etc)….totally off housing topic lolcatherine recently posted…Social Media Has Changed How I Manage My Money

Hahaha, no way. It’s definitely not a right of passage, but amongst hockey players disturbingly common.

When you realize how little space people lived in a few decades ago, it’s pretty crazy how much space we think we need now. I mean sure, I value having square feet and being able to get away from my spouse, but that’s decidedly a luxury in life!

Ha! I love that you called Bullshit on people. I think that much of the problem is that when people go out looking for a home they tend to want to buy much more house than they really need. It must be big and perfect. HGTV has a prefect example of this on this show: http://www.debtfreeguys.com/2015/07/reality-bites/

We bought our condo in a building that needs a little TLC and plan to make improvements over the years. That is part of the fun of owning a home. The newness for us is renewed every year or so, when we decide to make a change. Our bathrooms are on the chopping block in the next year or two. 😉David of the Debt Free Guys recently posted…Ode to Financial Leverage

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The Bottom

You made it all the way to the bottom! Thanks so much for reading.
Did you know that The Bottom is the name of a town on the island of Saba, in the Caribbean? I went there on a trip once.
The other bottoms I think about are my own bottom, and the bottom of the champagne bottle. Often when I find the bottom of the champagne bottle, my own bottom grows. Funny, that.

Thanks for reading!

- Anne

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